US Chicken Processors: A Brightening Outlook for 2026

After facing a challenging conclusion to 2025, the forecast for US chicken processors appears to be on the upswing as 2026 unfolds. Recent insights from investment firm Stephens Inc. suggest that production growth may be more tempered than previously anticipated, sparing processors from intense margin pressures.

Capacity Constraints Impacting Production Growth

The analysis highlights tightening hatchery capacity compared to recent years, hinting at a potential moderation in production growth for 2026. This follows a period where over-supply significantly impacted processor profitability, particularly during the latter months of 2025.

Fourth Quarter Reflections

The effects of these dynamics were evident in the fourth-quarter results. Chicken processing margins took a hit as seasonal demand dwindled while product availability improved. Federal data indicated a 3.2% year-over-year increase in chicken production by weight, driven by a higher number of processed birds which rose by 2.1%, along with a modest increase in average bird weights at 1.1%. Interestingly, pullet placements through November were approximately 1% lower than the previous year, signaling potential future supply moderation.

Recovery Expected in Margins

Despite the downturn experienced at the end of 2025, Stephens Inc. anticipates margin improvements as 2026 progresses. Expectations are set for a rebound to above mid-cycle margin levels by the second quarter, coinciding with peak seasonal demand for chicken. Early indicators support this projection, as chicken prices have started to stabilize as the new year commences.

A Promising Future Ahead

In summary, a combination of slowed production growth, early signs of improved pricing, and the approach of the seasonally strongest demand period implies that the pressures faced by chicken processors in late 2025 are likely to ease as we move deeper into 2026.

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